TOKYO — As the Japanese economy continues to recover, domestic beer shipments are rising for the first time in a decade. But changing tastes, healthier lifestyles and Japan's shrinking population are all posing huge obstacles for an industry that has already undergone painful restructuring.

Trying to adapt, Japan's biggest brewers - Kirin, Asahi, Sapporo and Suntory - have taken steps like diversifying into baby food, expanding in China and introducing soybean beer. So far, they have achieved mixed results.

"Until now, the beer market has been shrinking because people wanted cheaper drinks," said Shuji Takimoto, spokesman for the Brewers Association of Japan. "But just judging by the changing population, the future of beer also looks tough."

Still, in the first half of this year, domestic shipments of beer rose 0.3 percent, the first increase in a decade, as rising wages and consumer optimism encouraged people to dine out. Shipments of all beer products, including low-malt beer and no-malt beer, climbed 1.1 percent to 230.66 million cases, the first increase in five years.

"I love beer," said Akihiro Seki, 39 and an accountant, drinking his fifth glass at the Shiodome Garden, a rooftop beer restaurant. "We know the economy's getting better, so we feel more confident spending a little extra."

The Japanese began brewing beer in 1872, and by 2004, Japan was the world's sixth-biggest consumer, each year drinking 6.55 million kiloliters, or 1.73 billion gallons. Per capita, the Japanese drink the most beer in Asia, an annual average of 51.3 liters, or 13.5 gallons.

But this national habit is being undercut in several ways. Wine and spirits are gaining a larger following in Japan, while health concerns are changing attitudes toward consuming alcohol in general.

Meanwhile, Japan's declining population and growing proportion of people who are at least 65 years old - 21 percent, the world's highest level - point to a future with fewer beer drinkers.

To bolster sales during the country's long recent economic slump, Japanese beer makers introduced products to sidestep a tax that accounts for nearly half the price of a can of regular Japanese beer. The tax applies only to beers containing more than 67 percent malt. So brewers raced to roll out low-malt drinks, which substitute rice or corn syrup for malt, and even no-malt varieties made from soybeans.

At half the price of full-malt beers, the alternatives quickly won over cost- conscious drinkers. But profit margins on these variants are thin, and purists shun them. "The difference in taste is obvious," says Yukiko Oshima, a beer industry analyst in Tokyo with Credit Suisse First Boston.

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Kirin, which has just overtaken Asahi as Japan's top-selling beer, has branched into pharmaceuticals and seedlings for cut flowers to diversify its sources of revenue. Asahi, which gets 90 percent of its sales from alcohol, announced similar plans in April to buy a baby formula maker, Wakodo.

Then there is China, the world's top beer consumer and its fastest-growing market, expanding at around 10 percent in 2004. Japanese brewers are increasing production there as fast as possible.

Leading the way is Suntory, which began brewing beer in China in 1984. In June, it bought Chinese operations from the Australian company Foster's Group, and it now controls about 60 percent of a booming Shanghai beer market.

Asahi is setting up its fifth beer plant in China through joint ventures. And Kirin plans to build a brewery in Guangdong Province and buy out its local partner to make Zhuhai Kirin Brewery a wholly owned subsidiary. The total investment is valued at about ¥10 billion, or $87 million.

China, though, is a tough market, with historically low prices, and Japanese brands still trail other foreign rivals like Anheuser-Busch and SABMiller while also facing producers like InBev and Heineken.

And unlike their U.S. and European rivals, Japanese beer makers face another barrier in China, where many people still harbor bitter memories of World War II: Asahi, for example, means "rising sun" in Japanese.

Last year, Asahi beer was temporarily removed from stores during a Chinese boycott that was provoked by lingering anti-Japanese sentiment.